How Do NFL Compensatory Picks Work?

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The NFL draft rules are deceptively complex. Sure, they seem simple enough at first – the last place team from the previous season gets the first pick every round, the first place team gets the last pick every round – simple enough, right?

Things, of course, are much more complicated than that. Understanding the wheeling and dealing that happens before the draft, from how tenders for restricted free agents (RFAs) can help secure picks (or the RFA) to teams trading future draft picks for players. NFL picks are an intensely strategic part of the metagame. 

With enough research and gumption, though, you can figure out how most of the draft works – and even if you don’t understand why a particular trade was made, you’ll be able to understand its consequences. There is, however, one part of the draft that’s still shrouded in obscurity – in part, because the NFL Management Council uses a “proprietary formula” to calculate it. We’re talking, of course, about compensatory picks.

What are Compensatory Picks?

Why Do Compensatory Picks Exist?

Compensatory picks began in 1993, the same year that unrestricted free agents (UFAs) were introduced. We’re not going to get into the whole history of the salary cap era here, but it’s important to understand that UFAs and compensatory picks are intimately linked.

You see, compensatory picks were designed as a mechanism to soften the blow of teams losing UFAs to other teams. UFAs with expired contracts can negotiate with any team, and you’re not compensated with draft picks in the same way you would be if you tendered a contract to an RFA. 

The Basics

There are a maximum of 32 compensatory draft picks. Any given team can only receive a maximum of 4 compensatory draft picks. Compensatory picks occur at the ends of rounds 3-7. The picks are given to teams who lose more or better free agents to other teams than they gain (don’t worry, we’ll explain what that means in the next section).

Now that we’ve covered the bare minimum, it’s time to dig into the meat of compensatory picks. We’re going to discuss who gets the picks (and why), as well as their value. 

Who Gets Compensatory Picks?

Here’s where things get complex – fortunately, the Collective Bargaining Agreement (CBA) for 2020 was made public, and in it (under Appendix V) there is a lot of information about compensatory picks. We’re going to simplify the information that you can find there, but if you want all of the minutiae, I highly recommend reading all of Appendix V.

Unrestricted Free Agents vs. Compensatory Free Agents

Not every UFA a club loses entitles them to a compensatory pick – only compensatory free agents (CFAs) count. It’s a square-rectangle situation: all CFAs are UFAs, but not all UFAs are CFAs.

Clear as mud, right? Don’t worry, it’ll all make sense soon.

In order for be considered a CFA, a UFA must:

  1. Have signed with a new club during the prior free agency period
  2. Have ranked in the top 35% of League players based on criteria set in the CBA

UFAs who are traded are given points, and those who fall within the top 35% when all points are distributed are considered CFAs.

The Formula

  1. First, the salaries of the UFAs are taken into account. This calculation is done for all players at the end of the regular season, and it’s based on their Average Yearly Compensation (AYC). The AYC is calculated by dividing the player’s Gross Salary by their Maximum Possible Term. There are a lot of figures that make up Gross Salary, including:
  • The signing bonus
  • Option bonus
  • Their base salary
  • Roster bonuses
  • Reporting bonuses (including those “likely to be earned”)
  • Workout bonus/weight bonus

From there, every player is awarded points based on their AYC – one point for the lowest AYC, two points for the second lowest, and so on.

  1. Players selected First Team by the PFWA or AP (All-NFL or All-Pro, respectively) get 20 points.
  1. Players selected All Conference (All-AFC or All-NFC) by the PFWA get 5 points if they did not receive the 20 points for being selected All-NFL or All-Pro.
  2. Players receive points for participating in non-special team offensive/defensive plays. The points they get are determined by the percentage of non-special team plays they were involved with. There is a 25% threshold – if a player did not participate in at least 25% of plays, they get no points. Otherwise, the player receives points equal to the percentage of plays they participated in: a player who participated in 77% of plays receives 77 points.
  3. Place-kickers are granted 2 points for each field goal attempted and 1 point for each field goal made. Punters are granted 1 point for each punt attempted and another point for each punt inside the 20-yard line.

Once you add up all the points, you get a Final Numerical Value (FNV) – not the most creative name, I know.  Take all the League’s players, and you can give each one a rank (in percentage) based on their FNV – are they in the top 5% of FNVs, top 10% of FNVs, and so on.

Points & Percentages

Now that every player has points, and we’ve determined what percent they fall into, we can put them in a table. That table looks something like this:

% of players based on FNVCompensatory pick 
Top 5%3rd-round pick
Below top 5% – top 10%4th-round pick
Below top 10% – top 15%5th-round pick
Below top 15% – top 25%6th-round pick
Below top 25% – top 35%7th-round pick
Below top 35%Non-CFA

So if a club loses a CFA in the top 5% of players, and they don’t get a CFA from another club, they’re entitled to a round 3 compensatory pick. On the flipside, if you get as many CFAs as you lose, you won’t get a compensatory pick in most cases (more on that in a bit).

CFAs cancel each other out – in other words, if you lose 3 CFAs but you gain 2 CFAs, you’ll be entitled to one compensatory pick (assuming you don’t happen to be unlucky #33 – remember, there are a maximum of 32 compensatory picks per season). The NFL looks to see if, for any given CFA, you’ve acquired a CFA of equal or greater value, starting with the highest value CFA you’ve lost. In other words, if you trade off 2 CFAs that fall in the top 15% and one in the top 5%, and you receive a CFA in the top 5% and the top 15%, you’ll be entitled to a 5th-round compensatory pick (for the CFA in the top 15%).

Any good rule loves an exception, and there are two prominent ones here. First, any non-quarterback CFA who has 10 or more Accrued Seasons can only net you a maximum of a round 5 compensatory pick even if that player falls in or above the top 10%. (Brady, a quarterback, is the exception to this exception, which is why the Patriots got a Round 3 comp pick in 2020).

Second, while in most cases you cannot get a compensatory pick for when you’ve had an equal trade of CFAs, if the point total of all the CFAs you lost is 300 or greater more than the point total of all the CFAs you’ve gained, you get a compensatory pick after all other round 7 compensatory picks.

One last corner case I want to address: when there are less than 32 compensatory picks to be awarded, a supplemental draft begins. Clubs get draft picks as though it was an eighth-round of drafting – the lowest ranked team from the last season goes first, and so on, until a total of 32 compensatory picks + supplementary picks have been made.

The Value of Compensatory Picks

In most cases, the compensatory pick a club gets won’t be as valuable as the player they traded. That said, good management can eke a lot out of a compensatory pick. 

For one, you’re better off getting a 3rd-round pick – even at the end of the 3rd-round – than no pick at all in exchange for losing a valuable player. Second, compensatory picks can be excellent for team building and can help a club work around the salary cap – the highest paid round 3 compensatory pick in 2020, Malik Harrison, was offered under $4.5 million. 

Can You Trade NFL Compensatory Picks?

This is another huge boon for teams – since 2017, compensatory picks can be traded. As you probably know, the more bargaining chips a club has, the better it can manage its roster. 

The change makes compensatory picks measurably better than they were prior to 2017, and the prospect of getting a good round 3 pick or trading your compensatory picks to get an earlier pick gives clubs the flexibility needed to soften the blow of losing a great player.

Was Tom Brady a Compensatory Pick?

He was – and we all know how well that turned out for the Patriots! In fact, Brady was a round 6 compensatory pick for the Pats – that’s quite some compensation. 

There have been a number of other notable compensatory picks, including:

  • Ahmad Bradshaw (Giants, round 7)
  • Hines Ward (Steelers, round 3)
  • Larry Allen (Cowboys, round 2) – note that this was before compensatory picks started in round 3, way back in 1994.

All this to say – compensatory picks can add a lot of value to a team. Once you get past all of the math that goes into determining who gets compensatory picks – they’re just picks, and picks have a lot of value. Is it a perfect way to compensate clubs when their most valuable player signs to another club – maybe not. Nonetheless, they’re a far bit better than nothing.

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